NCAA bets could be leaving Las Vegas

Prospects to block federal wager ban begin to dim

WilliamSpain

As the NCAA men's basketball tournament nears its climax, Las Vegas' casino industry and its supporters in Congress have launched a full-court press to defeat a bill introduced last week that would ban legal betting on all collegiate, high-school and even Olympic sporting events -- a pastime that can currently be enjoyed only in the gambling halls of Nevada.

"Every basketball and football coach is lobbying for this bill, and the leadership is not going to fall on their swords for anyone this year."
Republican legislative aide

Although Vegas came away the winner in last year's debate on the legislation, which never made it to a floor vote in either chamber, prospects for killing the bill again are beginning to dim.

Low stakes

Considering the relatively low stakes involved, the casinos' willingness to put so much political capital on the table puzzles some observers. While more than $2 billion was legally bet on sporting events last year, the casinos only get to walk away with a small piece of that action.

Jason Ader, an analyst at Bear Stearns, said "total sports book revenue including professional and college betting (the two are not separated by the Nevada Gaming Board) was $68.1 million in 2000, or only 1.4 percent of total Strip revenues."

As such, he added, "it is not a meaningful contributor to revenues, and if NCAA betting were banned it wouldn't have a meaningful impact. March Madness can be a driver of visitation though, although I don't think it's really meaningful."

Sebastian Sinclair, a gaming analyst at Christiansen Capital Partners, noted that "three and a half times as much money is already being bet on the Internet -- and offshore bookmakers would love to see this bill pass."

Still, he said, casino operators are worried that "not only will they lose that market but they will lose that customer" without the draw of sports betting.

Betting-related scandals

Known as the Student Athlete Protection Act, the bill is being pushed by the NCAA and its member colleges, along with religious groups and anti-gambling activists. Citing a sordid roster of betting-related scandals in college sports and problem gambling by students on its member campuses, they believe the ban is necessary to protect both student athletes and the integrity of amateur athletics.

Doris Dixon, the lead NCAA lobbyist, says she's "optimistic that the bill will prevail" this time. Action on the measure is more likely, she said, because it's not an election year and Congress won't be pre-occupied by as many "global issues" as it was last year.

In the House, the legislation is being led by Reps. Lindsey Graham (R-S.C.) and Tim Roemer (D-Ind.), who have found support from a diverse group that includes Republican lawmaker Tom Osborne, the famed former University of Nebraska football coach, and Rep. Barney Frank, a liberal Massachusetts Democrat.

Kevin Bishop, a spokesman for Graham, said that "we do think it has a good majority " if it ever comes to the floor. While actually getting it there remains "an uphill battle," Bishop added, "we have got sort of a new secret weapon [in] Tom Osborne."

Casino operators and the congressional leaders who oppose the bill say legal sports-betting statutes are a states' rights issue. Collegiate athletics would be better served, these critics say, if Washington cracked down on illegal betting operations. They charge that the only beneficiaries of the bill would be unregulated bookies both online and off.

'Their bill does nothing'

"Look, if people want to do something about sports betting on college campuses, you have to go after the illegal operations - that's is where 99 percent of it occurs," Sen. John Ensign (R-Nev.) told CBS.MarketWatch.com. "Their bill does nothing. There are bookies in every single town in America, and if you think this is going to affect them, you're crazy."

And so the senator from the Silver State introduced an alternative bill that would require the attorney general to create a task force on illegal gambling; increase penalties for violations of federal anti-gambling statutes; and direct the National Institute of Justice to study the issue of sports betting by minors. A House version has already lined up nearly 80 cosponsors.

Ensign, who acknowledges that the NCAA-backed bill "would be difficult for a lot of people to vote against," does not want to see it come to the floor and vows "we will do absolutely anything we can to kill it."

In a break from the usual ideological lines that have divided Congress in recent years, hard-liners from both sides of the aisle can be found on both camps that are fighting over the issue. The Bush administration hasn't taken a public stand on the legislation.

Champions of both causes tend to agree that if this year's version ever comes to a roll call, it would pass handily. Last year's proposal sailed through the House Judiciary Committee -- one of Capitol Hill's most bitterly-divided panels.

Awash in millions of dollars worth of campaign cash from the gaming industry, and focused on a close-fought Nevada congressional contest, party leadership in both houses tacitly agreed to shelve the popular bill last year.

Underdog no more

The NCAA, outgunned if not outclassed the first time around, is no longer the same underdog. Besides making better use of the moral authority of its college presidents and coaches, timing is on its side. Elections are out of the way, and Capitol Hill's focus on campaign-finance reform raises the visibility of the factions that are driving the debate.

In many ways, the death of the legislation last year has become a perfect poster child for the influence of political contributions - all the more so because reform champion Sen. John McCain was one of the original sponsors. And the Arizona Republican is expected to sign on again when it is reintroduced in the Senate following the NCAA tournament.

Last year's moves to defeat the bill were "the most blatant case we have ever seen - ever - of money at work" on Capitol Hill, said Steve Weissman, legislative representative for campaign cash-tracker Public Citizen. See full story.

In the 2000 campaign cycle, contributions from individuals and PACs (including soft money) tied to the gaming business totaled $10.4 million, nearly double what was given in the previous cycle and a 30-fold increase from just 10 years ago, according to the Center for Responsive Politics.

The American Gaming Association, led by former Republican National Committee chief Frank Fahrenkopf, helps find worthy recipients for the goodies and even anted up $127,000 from its own kitty in the last cycle.

In contrast, "there is absolutely no money on the other side," Public Citizen's Weissman said of the NCAA-led coalition.

'Over a barrel'

But that may not matter so much this time. One high-level Republican aide who helped kill the bill last year put it this way: "Vegas is over a barrel on this one. Time is not on their side and the only question is how aggressively [Sen. Sam] Brownback and Graham want to push this." (Brownback, a Kansas Republican is one of the Senate's chief boosters of the bill.)

This time around," this source said, "every basketball and football coach is out there lobbying for this bill and the leadership is not going to fall on their swords for anyone this year."

Fahrenkopf, who is working to defeat the NCAA-backed bill, told lawmakers in a hearing last year, "There hasn't been a point-shaving scandal in five-and-a-half years." And episode was broken with the help of legal books in Las Vegas who uncovered - and reported - suspicious shifts in betting patterns, he said.

Not ready to fold

If the moral tone adopted by proponents of the ban helps to advance their cause, it also makes the casino industry angrier and more determined to fight back.

Alan Feldman, a spokesman for MGM Mirage, said "this attack is coming from a cabal of the NCAA and religious-right moralists, and we are not going to stand for it. We are going to protect the rights of our customers and shareholders."

Calling the NCAA "disingenuous and hypocritical," Feldman charged that the of millions of dollars that the NCAA makes off its March Madness broadcasting contract with CBS, it spends a tiny amount of money combating "problem gambling."

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is a significant shareholder in MarketWatch.com, the publisher of this report. CBS also owns stakes in SportsLine.com
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and Las Vegas Sports Consultants, an odds-making company.

Sinclair, who tracks the politics of gambling more closely than many on Wall Street, hesitates to guess which way the ban will go this year.

On the one hand, he points out there's little grass-roots support for the industry outside of its biggest market. By contrast, opponents of gambling "oppose it strongly oppose it, and no one over lost an a election from being tough on gambling."

However, Sinclair added, "In our experience, with few exceptions, once it has been authorized, endorsed and regulated, it doesn't go away. This ban would be unique in that regard."

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